Just like old-time TV, Internet providers take to the airwaves

Alphabet (GOOG)last week finally unveiled its plans to become a major Internet provider using fixed wireless technology.

This is not the pie-in-the-sky Project Loon and Skybender stuff, although those very experimental technologies could ultimately play a role. No, this is good, old-fashioned household Internet — except it gets beamed into your home wirelessly.

It’s not like Alphabet has been sitting on its hands with broadband. Slowly but surely, it has been building out fiber optic cable all over the country with its subsidiary Google Fiber. The company now has super high-speed fiber in places as diverse as Atlanta, Kansas City, Nashville, Provo and San Antonio.

But the process is slow and very expensive. Laying optical networks involves that dreaded, costly "last mile" into the home. That brings local city council hearings and permits and all sorts of other hassles. That’s why it’s interesting that Google Fiber is now officially committing to "fixed wireless" technologies. This avoids the dreaded last mile. The Internet is delivered over the air from nearby towers with something called millimeter-wave technology. No wires, no hassle.

In fact, this is such a big deal that the guy Alphabet brought on to do all of this, engineer Craig Barratt, reports directly to co-founder Larry Page. Barratt — a self-described wireless “megatrend” evangelist, Stanford Ph.D. and holder of 34 patents — previously ran wireless chipset maker Atheros Communications before it was acquired by QUALCOMM(QCOM), so he brings a wealth of expertise. And that expertise will come in handy because what he’s trying to do with Google Fiber has been tried many times before with little success.

Outrageous Gains!

One year from today, you could be cracking open a bottle of Dom Pérignon and feasting on caviar to celebrate the outrageous gains you’ve made in the bull market of a lifetime … profits that could let you retire early and rich! OR you could be kicking yourself, muttering, “I wish someone had told me this would happen and how to take full advantage of it.” Well, that’s exactly what I am going to tell you in this report! Click here for information! –Larry

Internal Sponsorship

The expensive debacle of Clearwire and Sprint comes immediately to mind. However, the promise of improved millimeter-wave technology has many industry watchers buzzing about the potential for a reboot. Startups such as Starry believe the technology is ready right now to deliver better-than-fiber speed Internet over the air, magically. Even Facebook(FB)has gotten into the act with its Terragraph project, a powerful antenna that can beam broadband Internet over very long distances.

The obstacle to this Internet happiness is the establishment. AT&T(T), Time Warner Cable(TWC), Verizon(VZ), Charter Communications(CHTR)and Cox Communications are not about to hand high-speed Internet to Google Fiber. They will obfuscate and erect barriers, legal and otherwise at every opportunity. But the odds are good that broadband Internet is about to see large-scale disruption. There is a wireless wave coming, and GOOG is the way to play it even if the path toward that outcome is rocky.

* * *

PRIME CUT

Unless you’ve been holed up in a cabin somewhere binge watching the latest season of The Unbreakable Kimmy Schmidt, you’re probably aware Amazon (AMZN) is unbundling its video-streaming service from Amazon Prime to become a stand-alone service. In theory, this makes it a formidable competitor for Netflix(NFLX), which, by the way, is the producer of Unbreakable Kimmy Schmidt.

But is that really true? The research analysts over at Bespoke Investment Group gave it a hard look and their sense, based on consumer polling, at least on a preliminary basis, is: "No, not yet".

The two most notable streaming services, Netflix excepted, are HBO Go and Amazon Prime. Interest in the former is growing by leaps and bounds. According to Streaming Media Providers, in January 2015 just 21% of viewers were even aware HBO Go existed. By April of this year, that number had catapulted to 61.6%. A new season of Game of Thrones had something to do with that. Still, based on the Bespoke analysis, subscriptions grew by about 2%. That is hardly a blip.

Then there is Amazon Prime. The subscription service, until this week, was essentially about free shipping with a video streamer thrown in for free. Fully 45.5% of Amazon shoppers in the U.S. subscribe to Prime but only 5% say the video service is the draw. It is true that Amazon does have some award-winning and critically acclaimed TV shows in Transparent and Mozart of the Jungle, as well as my favorites, Mad Dogs and Bosch, but that is not why people are grabbing Prime. If that is the case, viewers are unlikely to gravitate to the stand-alone service.

And finally, there is the whole Netflix loyalty dynamic. Say what you will about selection and even the recommendations cue, the service really does just work. It’s really kind of magical. Bespoke analysts found that three years ago, fully 15% of subscribers were looking to cancel the service. That number is now down to less than 10%. In short, rumors of Netflix’s death at the hands of the competition are both overly dramatic, so to speak, and premature.

Best wishes,

Jon Markman

P.S. Between January 4 and February 15, the S&P 500 lost around 7.5%. But the bank-stock benchmark dropped 16.1% — more than double. Mike Larson wrote The Mystery of the Golden Ratio to help you preserve your wealth and profit as this great crash begins.

Mr. Markman is the author of five best-selling books, including Reminiscences of a Stock Operator: Annotated Edition; New Day Trader’s Advantage, Swing Trading and Online Investing.

{14 comments }

WillTuesday, April 26, 2016 at 8:21 am

Thanks Jon. I do not pretend to know much about how distribution works, but two things came to my mind when I read your take on Internet distribution developments. Firstly wouldn’t there be some horrendous legal issues resulting from prior auctioned distribution rights? Second, would not this last mile being in any form of air wave enhance hacking? You did not delve into these issues; so if anyone can enlighten me on this, it would be appreciated. Thanks in advance for any positive enlightenment received.

charger johnTuesday, April 26, 2016 at 9:00 am

OH great! Microwave radiation from cell towers, smart meter radiation and now a powerful beam directed at our homes with yet another band of the spectrum! What could possibly go wrong.

Phil CoattaTuesday, April 26, 2016 at 9:01 am

Not sure what the fuss is all about, in Canada we have had wireless internet from towers for a long time, and it is regularly upgraded to the best speeds.

AlTuesday, April 26, 2016 at 9:10 am

It is my belief that because of their core businesses (and core competencies), Google, and Amazon can probably live side by side for some time, however, all others beware. Facebook, Tesla, and Twitter have advantages of “early user adoption” and can benefit from momentum going forward. Old. established companies like Cisco, Microsoft, IBM, HP, etc. need to embrace the cloud since their strong customer base is entrenched with data center and security issues. … The old adage “No one got fired for choosing IBM” may be coming to a serious crossroads.

Wally MietusTuesday, April 26, 2016 at 10:02 am

My ? is about the Free 31,000 Preparedness Kit. As a Member do I have to Pay for or I should get it Free. Thank Yoy.Wally Mietus

F151Tuesday, April 26, 2016 at 10:07 am

I can’t wait for goog to get in. Maybe they will shake things up. I am so sick of the poor service from existing providers.

$1,000 gold™Tuesday, April 26, 2016 at 11:36 am

excellent article, jon. thanks a million for sharing this. i can’t wait for google to come to town!

D. McCullamTuesday, April 26, 2016 at 12:10 pm

4-26-16 email. On one page of this email you cover the entire spectrum of market possibilities with Edelson selling the pending 31,000+ Dow versus Markman’s immediate threat of “The Great Crash”. And actions you suggest to investors to benefit from these predictions?

StanTuesday, April 26, 2016 at 7:44 pm

Where do I sign up. If they need to test the technology I volunteer. Currently a captive of a selected system operated and owned by local real estate company.

StanTuesday, April 26, 2016 at 7:47 pm

How far are we from cutting the cord on all wired deliveries.

wnettlesTuesday, April 26, 2016 at 7:51 pm

I am currently in the process of replacing my AT&T wired phone service with a fixed terminal wireless GSM provider, so, why not replace my old Comcast wired service with a fixed terminal wireless internet provider also? Guess I’ll be beta testing some new systems this year………..

DariaTuesday, April 26, 2016 at 9:01 pm

You totted AMBA so I purchased the stock . What say you now ? Please give an update on AMBA since it is down a lot at this time. Do you expect it to go up again and when might that turn around come.
Thanks
D

Jethro BodineWednesday, April 27, 2016 at 9:55 am

Absolutely correct D. McCullam! Mixed messages abound from these so-called experts. Guess we’ll see which one is right this time. After all, they – like so many others – have called EVERY up and down cycle correctly for the last few decades.

Hard to imagine, given their illustrious historical accuracy, that one of them will be wrong.

Mike HammettWednesday, April 27, 2016 at 4:50 pm

Nothing new here at all. There have been thousands of companies in the United States doing this for a long time, some of them 20 years. I’ve been doing it for 12 years. Technology keeps increasing what we can do for our customers.